On September 4, the Fed and the Texas Department of Banking published a cease and desist order alleging deficiencies identified in a Texas-based bank’s corporate governance, risk management and compliance with BSA/AML laws. Under the order, the bank’s board of directors will be required to submit a plan to strengthen oversight of compliance with BSA/AML requirements and Office of Foreign Assets Control (OFAC) regulations. The plan must include actions to maintain effective control, contain measures to track and escalate noncompliance, and ensure adequate resources and expertise.

The board must submit a corporate governance plan addressing the findings of an independent third-party report. The bank must also submit a revised BSA/AML compliance program, which should address third-party report findings, enhance internal controls, conduct comprehensive risk assessments, and ensure independent testing and effective training.

In addition, the bank must submit quarterly progress reports detailing actions taken to comply with the order. The bank’s board of directors consented to the order and waived any rights to challenge its terms.